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In a recent article, I explained how, by paying your college student to do a job for your business, you could save a lot of money.
For example, let’s say you paid your youngster $23,255 for a one-time job; one that wasn’t subject to self-employment taxes.
Using this strategy, you could deduct the $23,255 and your child would pay just $1,028 in 2021 taxes!
Sounds good, and it is good, but when you use this strategy three questions arise…
- Do I need to give my student a 1099? And which one—the NEC or the MISC? Also, which box do I check on the 1099?
- Since the $23,255 is not subject to the self-employment tax, how do I help my college-bound youngster avoid the kiddie tax (if he/she is still my dependent)?
- Would this one-time income allow an IRA to be opened? (Roth and/or traditional)
Please be aware that these are extremely important questions and you can benefit greatly if you know the answers.
Why? Because a huge deduction is involved, and if you get things wrong, you will lose out on a wonderful moneysaving opportunity.
Want to get things right?
It’s easy. All you have to do is…
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“Three Answers to
‘Paying for College’ Questions”